Until recently, the entire development and marketing process for a product took place exclusively from within the company. This is what is meant by closed innovation.
However, various factors have encouraged companies to gradually research other ways to improve the effectiveness of their innovation processes. This includes actively looking for new technologies and new ideas from outside of the company, by concluding agreements with "competitors" to create additional added value for the customer. This is what is meant by open innovation.
Open innovation involves a combination of internal and external sources for the development and the marketing of new technologies and new products.
More specifically, this means that not all good ideas necessarily come from the company, and that these good ideas do not necessarily need to be accomplished within this same company. The involvement of third parties in the development of new products and services may offer considerable added value. For example, consider a collaboration with other companies from the same industry, with suppliers, universities, and, naturally, with end users.
To illustrate this, we have provided a summary of the key points of these two methods:
Principles of closed innovation
- To be able to make the most of R&D activities, we need to manage research, development, and marketing activities ourselves.
- When we are responsible for a discovery, we are also the first to launch a new idea onto the market.
- The company that is the first to sell a certain product on a market has beaten its competitors.
- We must manage and protect our intellectual property so that our competitors cannot benefit from our ideas.
- All our "cerebral" forces work exclusively for us.
Principles of open innovation
- External sources of R&D can generate considerable added value, which must then be absorbed by internal R&D activities.
- We do not need to initiate research to take advantage of it.
- It is preferable to develop a better business model than to be the first on the market.
- We can prevail over the competition by making the most of internal and external ideas.
- Not all of our "cerebral" forces work exclusively for us. We must work with the right people, both inside and outside of our company.